Schwab brokerage is offering a new credit card that gives you 2% cash back on all purchases. The only catch is that the rewards can only be redeemed into a SchwabOne brokerage account. When linked to the Schwab card, the SchwabOne account has no minimum balance requirement or monthly service charges.
With no annual fee and no cashback limit, this is a very competitive card. I just hope it sticks around – many, many 2% cashback on everything cards have come and gone, from Farm Bureau to Countrywide, as that level of rewards make the issuer’s cut very slim. I’m sure they are counting on fees from the SchwabOne brokerage account to make up for the difference. Fidelity has a similar 2% back American Express card.
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Just a little FYI – the card is issued by FIA Card Services, N.A. which is Bank of America’s credit card arm. So, if you have reached the limit BofA will lend you then you may want to consider holding off applying, especially in the current environment.
I guess I have been around for a while. I still have credit cards that are paying my the 2% that are no longer offered that you mentioned. I have the Fidelity 529 card when it first came out and still gives back 2%. It dropped to 1.5% for new issuers. I also had signed up for the Countrywide credit card (when I got my mortgage through them)which gets 2% only when applied to existing mortgage (which is what I use it for) or existing bank account. This card is no longer available to apply from what I see. Not on their site anymore. Wonder what will happen to existing cardmembers. Hopefully they will keep it going.
Also no fees on foreign transactions, a very sweet deal.
Wow, this is pretty awesome, seeing as I already have a brokerage account with my investor checking account package. By the way, maybe you should also add the investor checking account to one of your bank account recommendation pages, because I do think it’s the best checking account out there even though their interest rate isn’t that high anymore. That way, people could open the checking, brokerage, and this credit card all at once.
Like yourself and Wayne, I still have my Fidelity 529 card. This one looks even better though, since you won’t have to monkey around with 529 tax rules to touch the money.
Where does it say there are no monthly maintenance fees for Schwab One? It seems like there is a $1000 minimum balance (at .10% interest rate)!
Steve,
http://www.schwab.com/public/schwab/banking_lending/credit_card/credit_card_faq.html?vl1=banking_lending&lvl2=credit_card&#unlimited
Under “Do I have to pay for a Schwab One account?”
Steve, it says it in the Invest First Credit Card FAQ under “Do I have to pay for a Schwab One account?” Of course, you’re correct in that the Schwab Pricing Guide-April 2008 does not mention “no monthy service fees and no minimum balance requirement”; it says it must be $1000 to avoid account closure. Another way to avoid the min balance and fees requirement, is to open the Schwab Bank High Yield Investor Checking with Schwab One brokerage accounts at the same time. (however, for those people who are concerned about credit scores; people have posted that Schwab does a hard credit pull and may do 2 pulls if you open account with margin.)
A disadvantage to this credit card is it has no preset limit feature (it is a visa signature card). This feature usually means that the credit issuer will not report the maximum credit line to credit reports; instead, it will report the balance.
So when a credit card has no preset limit, how does it affect your credit score. Does it negatively affect your overall score, or is it like not having the card at all?
No preset limit is a little misleading. It just means that your limit has a pad built in. If your credit limit is $5000 you might be able to spend up to $5500 or 6000 without penalty. No direct effect on your credit score unless you spend up to your limit which is always bad for your score.
What about tax? The rebate is deposited to a brokage account. Will it be reported as 1099-INT income and we pay tax on it?
@ Patrick Laura
No, it’s not taxable. Not sure if this is what Schwab does, but if they have any brains they will do what other rebate card issuers do. Namely, for tax purposes, the rebate is treated as a discount on goods and services, which is not income at all (nor taxable).
Please tell me about your 2% Visa card
Thank You
Thanks to everyone who commented. These have been very helpful to read. God bless you all.
Alas, the 2% card is no more… Thanks Chuck!